One of the things I love about my job is helping clients solve conundrums like this.

Buying or selling a home can be a challenge, no matter what stage of life you’re at. But there is one approach that everyone should take – and that’s a strategic one.

The accepted wisdom

As a general rule, it’s considered wise to sell first (with a long settlement) then purchase your new home at a time when the banks are more cautious about lending. This is all well and good – in theory – but as many a home buyer will vouch, stumbling across your dream home can happen when you least expect it. Often at a time when these general rules don’t apply.

This is where a strategic approach can come in handy, particularly one that takes into consideration the cyclical nature of the real estate market.

Responding to the market

In a market that’s rapidly moving upwards, there’s an obvious advantage in selling your existing home first (with a long settlement) then purchasing your new home second (with a shorter settlement) – in order to synchronise these two transactions. Alternatively, in a declining market the reverse is preferred: purchasing your new home first then selling your existing home second.

Sounds great . . in a perfect world. But a strategic approach takes into consideration the reality of the market and insights gleaned from inside knowledge.

Why strategy counts

When a client stumbles across the house of their dreams, prior to selling their existing home, there are three basic issues we sit down to consider that determine a more strategic approach.

Firstly, can you afford this new dream house? Secondly, do you need bridging finance? And finally, what will you do if your existing property doesn’t sell OR sells for less than you expected?

Buying a new home that stretches your budget doesn’t automatically increase the value of your existing property. However, taking a strategic approach ahead of time can make the entire process more manageable (and limit the surprises you encounter). Whether buying or selling first, start the entire process by considering the advantages and disadvantages of your choice – as they determine your next move.

For example, if you choose to sell first you’ll know precisely what your budget is AND you won’t require bridging finance. Obviously if you sell first, you’ll require accommodation for that period of time between vacating your old home and moving into your new one. Will you rent? Will you stay with relatives or friends? What additional costs will this incur in terms of moving or storing your furniture and belongings? In a soft market, it can often be a strategic choice to sell first then rent while you wait for the housing market to bottom out.

So if you’re considering your buying and selling options right now (or in the near future), it’s always worth asking your real estate agent about the value of planning ahead and considering your strategic options.

Cory McPherson is the Director of Capital Residential, one of Canberra’s premier boutique real estate agencies. With more than two decades’ experience in the ACT property market, Cory is well known for his strategic approach to property sales. See his latest insights, listings and sales results on LinkedInFacebook and Instagram.

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